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Wednesday, July 13, 2016

Big Change Possible in Massachusetts Wholesale Laws

You may recall that last year Boston-area distributors were caught giving kickbacks to retailers. The repercussions of that incident seem to be rippling through the Massachusetts state house in a serious way:

Massachusetts brewers unveiled a last-minute legislative proposal that
would dramatically reorder the state’s beer industry, making it far
easier for breweries to switch among distributors that bring their brews
to bars and package stores.

The measure, filed Wednesday by state Senator Barbara L’Italien, would
effectively repeal the state’s decades-old beer-franchise law, which
makes it difficult and expensive for breweries to fire their
distributors.... Instead, the legislation specifies that distribution deals would be
governed by the same type of private business contracts common in other
industries.... Under current law, a brewery is effectively locked into its distributor
after six months unless it can prove to state regulators the wholesaler
has met one of several conditions — such as violating the law or failing
to “exercise best efforts” in selling the beer.

The distributors were incensed, and it's not clear that the bill is going anywhere. Still, it's a sign that the beer market is in flux and there could be seismic changes coming. Indeed:

Treasurer Deborah Goldberg, whose office oversees the Massachusetts
Alcoholic Beverages Control Commission, is also threatening to shake up
the industry by launching a task force that will conduct a top-to-bottom review of the state’s liquor laws and regulations.

It's not actually clear that this would 1) solve the very real problem in which distributors currently act as a gateway for small breweries getting to the market, without 2) damaging them in the process. Distribution is always a weird part of the brewing industry, one nearly invisible to consumers. In states like Oregon, legislators have relaxed the law on self-distribution, so wholesalers have to compete on service if they want to lure little breweries, and that seems to be an effective solution. But each state has slightly different rules, and those rules affect little breweries in different ways. If Massachusetts does pass this bill, it will certainly be something the rest of the US will be watching closely.